Q. 6 DK Goel Accounting Ratios Solutions Class 12 CBSE (2024-25)

the solutions of Question number 6 of Accounting Ratios chapter 5 of DK Goel Class 12 CBSE (2024-25)

State giving reason, whether the Current Ratio will improve or decline or will have no effect in each one of the following transactions if Current Ratio is (i) 2.5 : 1, (ii) 1 : 1, (iii) 0.75 : 1.

1. Paid ₹ 50,000 to a Creditor.
2. Sale of goods at a loss of 10%.
3. Sale of a machinery for ₹ 1,00,000 (Book Value ₹ 1,20,000).
4. Payment of outstanding salaries.
5. Received ₹ 25,000 from a Debtor of ₹ 30,000 in full settlement of his account.
6. Bills payable discharged on maturity.
7. Bills Receivable drawn on debtor.
8. Purchased goods on credit.
9. Issued debentures to the vendors of machinery.
10. Payment of dividend.

Ans:-

(i) If Current Ratio is 2.5 :1,
Improve: 1,3,4,6,10; Decline : 2,5,8; No effect : 7,9

(ii) If Current Ratio is 1 : 1,
Improve : 3; Decline : 2, 5; No effect : 1, 4, 6, 7, 8, 9, 10

(iii) If Current Ratio is 0.75 : 1,
Improve : 3, 8; Decline : 1, 2, 4, 5, 6, 10; No effect : 7, 9]